EU leaders display a remarkable reluctance to address the root causes of the
eurozone’s problems.

Studying the financial headlines, it is easy to get the impression that the eurozone crisis is the subject of frenetic activity. Yesterday, for example, we witnessed a standoff over the restructuring of Greece’s debt; a plea for an “urgent” anti-recession strategy from EU president Herman Van Rompuy; a Franco-Spanish summit that sought to reassure the markets after both nations saw their credit rating downgraded; a Greek delegation heading to the International Monetary Fund, begging bowls at the ready; and a speech by George Osborne in Hong Kong in which he confirmed that Britain stands ready to increase its contribution to the IMF to the tune of billions of pounds.

Peer beneath the surface, however, and the true position is less impressive. For all the air miles they are racking up, Europe’s leaders are still displaying a remarkable reluctance to address the root causes of the eurozone’s problems. While some kind of restructuring of Greece’s debts is obviously a necessity, the broader point remains that they are treating a crisis of competitiveness – due to the inflexible exchange rates imposed by the euro – as a crisis of liquidity. The chosen treatment is to shovel cash at the markets (to stave off an immediate crisis) while imposing self-defeating mutual austerity via the “fiscal compact” so proudly agreed at the most recent EU conference. All the while, the deeper problem, which lay behind the recent mass downgrade by Standard & Poor’s, goes unaddressed.

The fact that the IMF has been drawn into the crisis – and that the Chancellor has been urging Asia’s governments to lend a helping hand – shows the extent of the Continent’s refusal to face reality. Collectively, Europe is rich enough to bail out its more profligate members. But instead, it is trying to persuade the rest of the world to save it from itself. So apocalyptic would the consequences be, were the eurozone and its banking system to collapse, that such moral blackmail might even work. Yet Britain, for one, should feel deeply uneasy about contributing, even indirectly, to a rescue package that is philosophically as well as economically incoherent. Mr Osborne is right that, amid such global uncertainty, we must stand ready to play our part in the stabilisation of the system. But he was also right when he refused to stump up for a European bail-out package back in December; and it is difficult to see what has changed.

Ultimately, the situation now feels eerily like the Phoney War. On the horizon, there are rumblings of downgrades and defaults. No one knows when or how the moment of crisis will arrive. But in the face of such a catastrophe, buying a few more tin hats seems like a futile gesture.